This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the bottom of any article.

June 14, 2012

Fixed Annuity Sales Rise 23% for Q1

Beacon report finds income annuity is bestselling product for first time

Allianz was the top seller of fixed annuities in the first quarter. (Photo: AP)

Fixed annuity sales in the first quarter of 2012 climbed almost 23% from a year ago and an income annuity was the quarter’s bestselling product for the first time, according to Beacon Research’s Fixed Annuity Premium Study. Indexed annuities rose nearly 9%.

"Both product types did well despite lower interest rates due to demand for guarantees in general and reliable retirement income in particular,” Jeremy Alexander, CEO of Beacon Research, said in a statement. “The success of New York Life’s deferred income annuity also helped boost overall income annuity results, and indexed annuity cap rates looked comparatively good relative to CD and annuity fixed rates.”

Total fixed annuity sales were $16.9 billion in first quarter 2012. Fixed rate market value adjustments were up 1.6% from the prior quarter, while sales of the other product types declined slightly for an overall decrease of 2.2%. Results were 8.8% behind the year-ago period on lower fixed-rate annuity sales.

Estimated Sales by Product Type (in $ millions)

Total

Fixed Rate

Non-MVA

Fixed Rate

MVA

Indexed

Income

Q1 ‘12

16,943

5,253

1,368

8,166

2,156

Q4 ‘11

17,330

5,409

1,346

8,352

2,221

% change

-2.2%

-2.9%

1.6%

-2.2%

-3.0%

Q1 ‘12

16,943

5,253

1,368

8,166

2,156

Q1 ‘11

18,570

7,796

1,527

7,498

1,754

% change

-8.8%

-32.6%

-10.4%

8.9%

22.9%

Great American joined the quarter’s top five companies for the first time, coming in fifth. Aviva USA moved up a notch and New York Life advanced two, to take second and third place, respectively. Allianz continued as sales leader, and American Equity remained a top-five company. First quarter results for the top five study participants were as follows:

Sales (in thousands)Total Fixed Annuity

Allianz 1,484,018

Aviva USA 1,177,884

New York Life 1,059,701

American Equity 979,421

Great American 773,849

In terms of sales by product type and distribution channel, the leading companies were unchanged from the prior quarter.

The success of New York Life’s Lifetime Income Annuity made it the first product of its type to be a quarterly bestseller. The other leading products were once again indexed annuities issued by Allianz, Aviva USA and American Equity.

“As carriers respond to the low rate environment, we expect to see more MVAs, unbundled product features, and GLWB rollup rates that vary based on credited interest,” Alexander concluded.